Megan McArdle says it well:
But whatever your feeling about government intervention in the economy, or the correct level of income inequality, I think there's one thing we can all agree on: for the world to get better, things that don't work have to fail.
The Economist had the best argument I've read for saying "yes" to a bailout of the financial industry and "no" to a bailout of the car industry. With the financial industry - the 'bad' would have taken out the 'good' - they are so intertwined. A collapse in confidence in the banking system would hurt everyone. Your honest local bank, in your little town, may have gone under due to the mismanagement of a few bad apples. (And picture this on a global scale.)
But the auto industry is different. If GM goes under, the plant in Tennessee that is making Toyotas will be fine. It will be terrible and awful for anyone associated with GM. But it won't completely kill the rest of the industry.
The Big Three aren't working. Propping their bloated bureaucracies and their unwieldy unions won't help our country.